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 Reports and Commentary from the Investment World

Reports and commentaries are posted here on a regular basis.


Cash ISA


Cash ISA 2006-03-29

What is an ISA?
An ISA (Individual Savings Account) is a special type of account within which you can save and invest up to £7,000 tax efficiently each tax year.  ISAs were introduced by the U.K Government to replace TESSAs and PEPs from April 1999 and they are designed to encourage more people to save and invest.
The favourable tax treatment of ISAs may change in the future but the U.K Government has stated that the scheme will run until 2009. Any UK resident aged 18 and over (16 for cash ISAs) can open an ISA.

Types of ISAs
ISAs are different from ordinary accounts because they offer you a choice of two different components:

Cash or Stocks and Shares
You can pick and mix from these components to suit your needs. What you choose depends on whether you go for a Mini ISA or a Maxi ISA. You can't have both so it is important you choose the right one for your needs.

Mini ISAs
There are 2 types of Mini ISA:
Cash or Stocks and Shares .
You can invest in up to two Mini ISAs in each tax year - one for each of the two different components.
You can hold each component with a different ISA provider if you wish.

Maxi ISAs
Maxi ISAs allow you to combine investments of the two components, but must include at least the Stocks and Shares element. This type of ISA must be held with one single product provider.

TESSA-only ISAs are designed for investment of capital from a matured TESSA (up to a maximum of £9,000), and will accept cash investments only.  This means you can continue to earn tax-free interest after your TESSA matures.  What's more, you can have a TESSA-only ISA in addition to your standard ISA allowance. 


Disclaimer: All the information above is provided as a service for individuals and institutions. It should in no way be construed as a recommendation as an investment. Investment decisions should be based on the risk tolerance and planning horizon of the investor. Market participants must understand that past performance is also not a guarantee or predictor of future results.